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Ottawa's car emissions move creates cloud of anxiety for auto industry

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Carmakers are being ``picked on'' as the federal government plays politics with environmental policy, a leading auto-sector analyst said after industry executives were told in Ottawa that new exhaust-pollution rules are coming down the pipe.

And industry players said Wednesday the cloud of uncertainty emanating from the capital jeopardizes billions of dollars of investment in Canada.

Tuesday evening's meeting with Environment Minister Rona Ambrose, Finance Minister Jim Flaherty and other officials provided no specifics on the rules the Conservative government intends to develop, said Canadian Auto Workers union president Buzz Hargrove, who attended the session.

Those rules would take effect after the expiry in 2010 of an accord under which new cars sold in Canada essentially meet U.S. federal pollution regulations.

Hargrove said consultation was promised, and he discounted reports that the ministers aim to adopt the stringent pollution standards in force in the state of California.

But the anxiety about 2011 _ in an industry where new products typically take half a decade or more to develop _ is already damaging, he said.

Carmakers have vehicles as far in the future as 2013 ``not only on the drawing board but in the clay shop, in the design shops,'' Hargrove said.

``They're putting millions and millions of dollars into these new product lines, and the uncertainty of what the restrictions are going to be will throw all this up in the air in terms of investment in Canada.''

Dennis DesRosiers, Canada's best-known auto industry analyst, said the Conservatives are politicizing the tailpipe emissions issue for their own benefit.

``There are two things that the government is desperately trying to avoid,'' DesRosiers commented.

``First, to avoid at all costs telling Big Oil that they have a role to play. Second, to avoid having to tell consumers that they have a role to play. It is the auto sector that is being picked on.''

Environment Minister Ambrose has said she also intends to impose new regulations in the oil and gas industry _ again with no details.

In the meantime, without a national fuel standard ``we have dirty gas,'' DesRosiers wrote.

Providing cleaner-burning fuel ``would mean Big Oil would have to invest billions,'' he added, ``and we know whose money is behind the current government.''

Specific proposals for new rules on vehicles and fuels will come in the near future but ``would be speculation at this time,'' a spokeswoman for the environment minister, Shannon Haggarty, said Wednesday.

``But what the minister and the government have said is that this plan will be national in scope and looking to all industry that has a role to play in the solutions for the environment.''

On a deeper level, ``someone has to deliver a message to consumers that consumers fundamentally do not want to hear,'' analyst DesRosiers asserted.

``The message to be more attentive to the environment with their vehicle ownership, usage or purchasing habits. That may mean owning fewer vehicles, getting rid of an old polluter, buying a more efficient vehicle, driving less... or a dozen other things that put more of the onus on consumers,'' he said.

``But no politician wants to deliver this message. They want someone else to do their dirty work.''

Meeting tougher emission standards would likely require massive investments by carmakers and gasoline refiners, probably pushing up prices for consumers and perhaps leaving Canada out of synch with the United States _ to which four-fifths of the cars built in Canada are exported.

Shell Canada (TSX:SHC), Suncor Energy (TSX:SU) and other refiners invested hundreds of millions of dollars to reduce sulphur in diesel fuel and meet federal regulations that took effect this summer.

Meanwhile, automakers have spent heavily for decades on pollution-control technology which has cut per-vehicle emissions of various noxious compounds by between 80 and 99 per cent since the 1960s.

For analyst DesRosiers, moving to regulate the auto industry into higher standards is a huge step backwards.

``What is threatened is future investments in Canada across the entire auto sector _ manufacturing, distribution and retail,'' he wrote.

``In manufacturing alone we have to invest $4 billion a year to
keep up with the global auto sector.''

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Ottawa's car emissions move creates cloud of anxiety for auto industry
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